Should You Have A Will Or A Living Trust?
by Carlos Turner
The Financial Coach
A Simple Will must give all assets of inheritance away immediately, with no conditions attached. There may be alternatives as to who receives it and what is received, based on conditions at the time of passing, but nothing must be held back. This also means that you may not specify a specific use for any assets.
One exception is to have a will that creates a "life estate" for someone. This is almost exclusively done with respect to real estate. One example would be to give your personal residence to a grandchild, with a life estate for the parent of that grandchild.
- The life estate means that the parent of the child may live in the property during their lifetime, and at their passing away, the grandchild becomes the free and clear owner.
Probate laws vary from state to state but generally, if your estate is worth more than $100,000 and you have only a will (or worst yet, no will at all), under most circumstances, your heirs must pay for a court proceeding called probate in order to transfer your assets to them.
A living trust is a written declaration and contract in which you state that you (as "grantor") are transferring your property into a living trust for the benefit of yourself during your lifetime (lifetime "beneficiary") and then for the benefit of your heirs (remainder "beneficiaries").
You will be the "trustee" of your living trust which means that during your lifetime, you will have complete control over the living trust's assets (real estate, bank accounts, investments, etc.). The "successor trustee" you name will take control over your living trust in case of your death or incapacity. In addition, you will have the power to change, amend or revoke your living trust at any time during your lifetime.
A trust can transfer all of your assets to your heirs without requiring your heirs to go to court or pay any probate charges.
The best solution for your estate might have less to do with deciding between a will versus a living trust, and more on how both documents best establish the future for your heirs.
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